SEBI Probes LS Industries’ $1 Investment Turning $328.6 Million
SEBI Probes LS Industries’ $1 Investment Turning $328.6 Million
Dubai-based investor Jahangir Panikkaveettil Perumbarambathu profited significantly from selling shares, raising concerns about FEMA violations
The Securities and Exchange Board of India (SEBI) barred Himachal Pradesh-based LS Industries, its promoter Profound Finance, and four other entities from trading after allegations of fraudulent activities and stock price manipulation.
The controversy revolves around Dubai-based NRI investor Jahangir Panikkaveettil Perumbarambathu, who made a windfall of Rs.1.14 crore by selling his shares in LS Industries.
SEBI’s investigation revealed that Jahangir had acquired 10.28 crore company’s shares for $1. Despite negligible company revenue and a significant price surge, his remaining holdings are worth Rs.698 crore as of 10 February 2025.
The investment, now worth $328.6 million at the company's peak valuation, raised concerns over possible Foreign Exchange Management Act (FEMA) violations.
The capital market regulator observed that despite selling a fraction of his shares during market highs, Jahangir gained significantly while transferring a substantial amount back to Dubai.
LS Industries and its associates inflated the company's share price artificially despite its weak financials. Former company director Suet Meng Chay transferred a 12.12 percent stake to Jahangir for $1, which later skyrocketed.
SEBI noted that Jahangir's trading activity aligned with two significant price rise periods between July-September and November-December. He offloaded shares at the stock's peak of Rs.267.50 on 27 September 2024, raising coordinated trading pattern concerns.
Ashwani Bhatia, SEBI's whole-time member said that LS Industries, its promoter and Jahangir were allegedly a part of the manipulative scheme to defraud investors. He emphasized, "There’s a need to act before another pump-and-dump scheme causes harm to innocent investors.”
Meanwhile, LS Industries has announced the acquisition of Robochef.
SEBI became alarmed when relatives of Robochef's directors, including Suresh Goyal, Alka Sahni and Shashi Kant Sahni HUF, sold shares during the price surge, gaining substantially.
The company’s valuation of Rs.5,500 crore despite zero revenue suggests irregularities in the stock price.
Thus, SEBI is probing into the potential violations of the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) regulations and the Listing Obligation and Disclosure Requirements (LODR) norms.
SEBI emphasized the urgency of acting to protect investors and maintain market integrity given the number of public shareholders increase from 3,892 in June 2024 to 6,106 by December 2024.
